Purpose

Impact Aid provides financial assistance to school districts affected by federal activities. Because federal property is exempt from local property taxes, Impact Aid helps to replace the lost revenue that would otherwise be available to pay for educating children who live on federal property or whose parents work on federal property.

How It Works

Impact Aid provides formula and competitive grants directly to eligible school districts. Funds flow primarily through Basic Support Payments on behalf of federally connected children (86 percent of all Impact Aid funds requested in the president's budget for FY 2003). Additional payments are made for federally connected children with disabilities, construction and renovation of school facilities, federal property removed from local tax rolls after 1938, and maintenance of school facilities owned by the U.S. Department of Education.

Basic Support Payments provide formula grants to about 1,400 school districts with federally connected children--that is, children who live on federal property with a parent who is employed on federal property; children who live on federal property with a parent who is on active military duty or is a foreign military officer; children who live on certain Indian lands; children who do not live on federal property but who have a parent who is on active military duty or is a foreign military officer; children who live in low-rent housing assisted under the United States Housing Act of 1937; children who live on federal property but do not fit any of the above categories; and children who do not live on federal property but have a parent who is employed on federal property.

Payments for Children with Disabilities provide supplemental assistance to school districts that have certain federally connected children who have disabilities.

Construction funds include both formula and competitive grants to support the construction or renovation of school facilities in eligible school districts, which include districts with large numbers of children living on Indian lands or children with a parent in the uniformed services.

Payments for Federal Property provide aid to districts with significant amounts of federally owned property acquired since 1938, generally based on an estimate of the local revenue that the school district would have received if the property had remained on the tax rolls.

Facilities Maintenance funds support essential repairs to school facilities owned by the U.S. Department of Education. These schools serve large numbers of military dependents. The Department is repairing these schools so that local school districts will accept the transfer of title for these buildings.